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Andy Home: Bearish funds turn away from volatile copper and towards aluminium
Fund managers have been hit hard by the price volatility that has resulted from U.S. tariffs on imports of copper. Since February when U.S. president Donald Trump ordered a probe into copper imports, the copper market has been dominated by the premium that the CME U.S. price commands over the London Metal Exchange (LME)'s international price. The trade has been volatile and the price gap between the US and Europe has undermined the traditional investment role of Doctor Copper as a proxy to the state in global manufacturing. Many fund managers simply gave up. Investor positioning and open interest in the CME Copper contract has dropped dramatically over the past couple of months. Others have turned to aluminium in order to express their negative views of the global trade situation. HEADLINE TURBULENCE Money managers were evenly divided between long and shorter bets when they began the year. Fund positioning on CME copper contracts amounted 134,000 contracts. According to the latest Commitments of Traders Report, the total participation has decreased to 82,000 contracts. Investors are now net long at 24,780 contracts. Trading on the CME copper contract dropped 35% year-over-year in the period January-April, while the market open interest reached a new low of one year at the end last month. It's not surprising that copper is still in the news, given the fact that the investigation under Section 232 into U.S. Imports has been ongoing for a long time. The constant stream of headlines about the copper tariff as well as the wider tariff standoff with China have turned the trading of metals into a wild ride. This is especially true for the CME contract. Many investors have reduced exposure to risk, either voluntarily or involuntarily. Funds that expected copper prices to drop due to trade tariffs impacting global growth were particularly hard-hit. Money manager short positions are at their lowest level since November 2022. Bulls are also not raging. Since the middle of April, the collective investment's long position has flattened. ALUMINIUM UNDER THE HAMMER No indications exist that money from the CME is now on the London copper markets. Fund positioning for LME copper has also been reduced due to a decline in both bullish and bearish bets. Money managers who want to convey a negative macro-picture have instead focused their attention on aluminium. The CME aluminium contract does not reflect the LME international product but is instead a U.S.-cleared customs price. The CME's U.S. Midwest Physical Premium Contract is the only place where the trade in tariffs can be done. This has prompted funds to increase their short positions in LME aluminum to the highest level since July last year. Investors have also slashed their bets for higher aluminium prices. This has resulted in a net fund position that is now neutral, having been super-bullish just a few months ago. Divergent Fortunes Recent price differences between copper and aluminium can be explained by the rotation of funds from copper to aluminum. LME's three-month copper is now back to its previous $9,500/metric ton price after a 17% increase from the lows of April 7. LME aluminium, on the other hand, has recovered a modest 6% from April's sell-off. The price of three-month metal has fallen by 4% since the beginning of the year, and is now trading at around $2450. It is the second weakest performer in the LME base metals, after zinc. Bears may still have a rough time with aluminium. LME warehouse inventories are steadily decreasing, time-spreads were contracted in the last month and the benchmark cash to three-months period flirted with a backwardation. However, fund managers still feel that it's a lot safer than trying to ride a copper roller coaster. These are the opinions of a columnist who writes for.
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Republicans are hoping to push through Trump's tax cuts despite divisions
Republicans in the U.S. House of Representatives are trying to push President Donald Trump's tax bill through this week despite a long-running battle over tax breaks and spending cuts that threatens their fragile majority. The government continued to push ahead, even after Moody's stripped the U.S. Federal Government of its top credit rating. They said that Congress and multiple administrations had not shown any political will to deal with the nation's $36.2 trillion debt. U.S. Stock Futures indicated a lower trading day on Monday following Moody's decision. Four conservatives who were adamant about spending cuts demanded more in private discussions with Republican leaders and White House officials. They voted in favor of moving forward in an unusual Sunday night House Budget Committee meeting. The next test will come at 1 am ET (0500 GMT) on Wednesday when the House Rules Committee decides whether to allow it to be put up for a vote in the full chamber. The House Rules Committee will decide whether it can be put to a vote by the entire chamber on Wednesday at 1 a.m. ET (0500 GMT). Republicans were divided on major issues, such as Medicaid cuts and limitations to the deduction of state and local tax. We'll have to meet with other members of the conference this week. "This bill is important to everyone, from moderates to ultra-conservatives, and all in between," said No. CNBC reported on Monday that Louisiana's 2nd House Republican Representative Steve Scalise. Analysts who are not partisan say that the bill will also add between $3 trillion and $5 trillion in debt to the United States over the next 10 years. House Speaker Mike Johnson wants the chamber to pass legislation and send it to the Senate by the U.S. Memorial Day weekend on May 26. Trump's Republicans have a majority of 220-213 in the House, but they are divided on how much to cut spending to offset the costs of tax cuts. So far the Republican-controlled Congress has not rejected any of Trump's legislative requests. Hardline conservatives demand that the Medicaid program, which provides healthcare to low-income Americans, be cut deeply and that the green tax credit is repealed completely. Moderate Republicans oppose this because they believe it will harm working-class and farmer voters who will vote in 2026's midterm elections. According to the nonpartisan Congressional Budget Office, the cuts in spending already proposed by the legislation will kick 8,6 million people out of Medicaid. MEDICAID WORK REQUIREMENTS Republican lawmakers are considering new work requirements for Medicaid recipients, but their debate centers on the timing of these requirements, Republican leadership advisers told journalists on Monday. Republicans and Democrats are at odds on the issue of the deduction of state and local tax, also known as SALT. This is a critical issue for a few incumbents in states like New York and California, which are crucial to the narrow majority of the Republican Party in the House. Hardliners claim that spending cuts must be made to counter Trump's tax cut. "The bill is not ready yet," said Chip Roy, a prominent conservative who was one of four hardliner representatives that voted "present" to allow the bill to advance on Sunday night. The Texas Republican stated in a post on social media that "we can and must improve before we pass the end product." The measure would extend Trump’s 2017 tax cuts – his signature legislative achievement of his first term – reduce taxes on certain tips and overtime earnings, boost defense expenditures and provide more funding for his border and Immigration crackdown. In Sunday TV interviews, Johnson and Treasury Sec. Scott Bessent downplayed the significance of the rating reduction. The speaker pointed to the action by the credit rating agency as proof that Congress must pass the Trump Bill quickly. The Senate Republicans have said that they will alter the bill, if the bill is able to pass the lower chamber. (Reporting and editing by Scott Malone; Toby Chopra, Alistair Bell and Scott Malone)
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Official French says Berlin and Paris have resolved their differences over nuclear energy
A French official confirmed a previous report that the new German government had signaled France it would no longer object to the EU treating nuclear energy on an equal footing with renewable energies. EU's largest economies have been in disagreement for years over whether or not to promote nuclear power to meet CO2 emission targets. This has delayed policymaking to combat climate change. France, with its 70% atomic energy, is the main nuclear champion in Europe. Germany, which phased out all its nuclear power plants, has seen it as low carbon but not renewable. The new German Chancellor Friedrich Merz has pledged a reset of relations with France. He has called the exit from nuclear energy as a mistake. An official from France confirmed an earlier report in the Financial Times that Germany was signaling its intention to drop its long-held antipathy towards nuclear power. This is the first tangible sign of rapprochement between France and Germany. The official referred to a Le Figaro editorial written by Merz in conjunction with French President Emmanuel Macron, published earlier in the month, wherein both leaders stated that their countries "would realign their energy policy based on competitiveness, sovereignty, and climate neutrality". They said: "This includes applying the principle technological neutrality and ensuring nondiscriminatory treatments of all low-carbon energy sources within the EU." The German Economy Ministry spokesperson declined to comment. The nuclear energy industry is booming in Europe. Belgium has passed a law to stop a planned phase out, and Sweden, as well as some other countries, are planning on building more reactors. (Reporting from Sarah Marsh in Berlin, and Michel Rose in Paris. Additional Reporting by Ludwig Burger at Berlin. Editing by Thomas Seythal and Jan Harvey.
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World Court supports Equatorial Guinea on islands dispute with Gabon
The International Court of Justice (ICJ), which has been resolving a dispute between Gabon and Equatorial Guinea for decades, ruled Monday that Equatorial Guinea had a claim on a group of small islands located in waters potentially rich in oil in the Gulf of Guinea. The ICJ (also known as the World Court) sided with Equatorial Guinea in its final and binding decision. It said that its claim to the islands based upon a 1900 agreement dividing French and Spanish colonial properties in West Africa, should be respected. The court ruled that a 1974 accord on which Gabon had based its claim to the islands was not a legal treaty. The title "that has legal force in relation to sovereignty over islands is the title that the Kingdom of Spain held on 12 October 1968 and which the Republic of Equatorial Guinea followed" was stated. The ruling requires Gabon to remove all its soldiers from Mbanie Island, a tiny island less than one kilometer long off the coast. In 1972, the Gabonese army expelled Equatorial Guinean soldiers from Mbanie. Since then, Gabon has established its own military presence in the 74-acre (30-hectare) island that is virtually uninhabited. The dispute between Mbanie, Cocotiers Island and Conga Island was forgotten until the oil boom in the Gulf of Guinea rekindled the interest. In 2016, after years of UN mediation, the African neighbours - both major oil producers - signed an agreement which would let the World Court decide the issue. Reporting by Stephanie van den Berg and Charlotte Van Campenhout; Editing and production by Andrew Cawthorne, Hugh Lawson and Hugh Lawson.
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After Moody's US downgrade, gold firms are seeing a surge in demand for safe-havens.
Gold prices rose on Monday as a result of a weaker dollar and heightened demand for safe-haven assets after Moody's lowered the credit rating of the U.S. Government. Spot gold increased 1% to $3.234.70 per ounce at 1050 ET (1450 GMT). U.S. Gold Futures rose 1.6% to $3237.80. Moody's downgraded the United States' credit rating from "Aaa to "Aa1 on Friday, citing "significantly higher debt and interest rates than similar rated sovereigns". "Overall, I think that gold will be a safe investment over the next few weeks considering the downgrade of the United States. Bob Haberkorn is a senior market strategist with RJO Futures. Wall Street's major indexes fell, while the U.S. Dollar Index hit its lowest since May 8. Gold becomes cheaper for holders of other currencies when the U.S. dollar is weaker. The financial markets were also a little rattled when U.S. Treasury Sec. Scott Bessent announced on Sunday that Donald Trump would impose tariffs on the same rate as he had threatened on April 2, if trading partners failed to negotiate "in good faith". Gold has reached multiple records this year, and it is up by 23.2% this year. Goldman Sachs has maintained its gold forecast at $3,700/toz for the end of this year and $4,000/toz in mid-2026. This is due to a modest amount of diversification by the private sector into gold. Trump will also speak with Russian President Vladimir Putin on the subject of peace in Ukraine, while European leaders have demanded an immediate ceasefire from Moscow to end this over three-year old war. Palladium rose 0.9% to $969.38, and spot silver increased 0.2% to $32.33. The World Platinum Investment Council reported that the demand for platinum jewellery has rebounded in China after a decade of decline. This is contributing to an even greater global deficit than expected this year. Platinum rose 0.4% to $991.76. (Reporting by Sarah Qureshi in Bengaluru; Editing by Emelia Sithole-Matarise)
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Denmark Plans to Subvention Up to $8.3 Billion for Offshore Wind Energy
Denmark's energy ministry announced on Monday that it will hold a tender for offshore wind power with a three-gigawatt capacity, enough to power 3 million homes. The subsidies offered to developers could reach up to $55.2 billion Danish crowns. Due to the lack of interest in tenders and rising costs, offshore wind has been struggling with a supply chain that is clogged up, as well as higher interest rates. In a press release, Energy Minister Lars Aagaard stated that "we need green energy and power more reliable to make Denmark and Europe energy independent from Russia." The level of subsidy required will be determined by the bids submitted in the tender. A cap has been set at 55,2 billion crowns for a period of 20 years. The ministry stated that the price of the bid and the evolution of the electricity prices will determine whether or not money is needed to support projects. In January, Denmark announced that it would stop all offshore wind tenders in progress to restructure its model. It said a framework with no subsidies offered was not working under the existing market conditions. The Nordic country failed to receive any bids a month ago in its largest offshore wind tender. Analysts attributed this to an auction model that was rigid and the failure to adapt to new economic realities for renewable energy projects. ($1 = 6.6318 Danish crowns) (Reporting by Louise Rasmussen and Nora Buli, editing by Terje Solsvik) Denmark is a pioneer of both onshore wind and offshore wind. It's home to the turbine manufacturer Vestas as well as Orsted, which is the largest offshore wind developer in the world. Reporting by Louise Rasmussen, Nora Buli and Terje Solsvik.
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In the Pertamina case, Indonesia contacts trading firms in Singapore
It was announced on Monday that the Indonesian Attorney General's Office had contacted a number trading firms in Singapore about a corruption probe involving Pertamina. In the first half of this year, a number of Pertamina subsidiaries executives were arrested for alleged corruption in relation to oil imports from 2018 through 2023. This allegedly caused state losses of $12 billion. Pertamina apologized publicly and promised to improve the transparency after the arrests. Harli Siregar, a spokeswoman for the Attorney General's Office said that investigators want to speak with some Singapore trading firms about the case. Siregar stated that earlier attempts to summon these companies to Jakarta, whose names were not disclosed, failed. Therefore, the companies may be questioned in Singapore. Siregar declined to provide any further details. "These companies will also be questioned in order to gather more evidence for the ongoing investigation." In response to an inquiry for comment, Fadjar Santoso, a Pertamina spokeswoman, said: "We respect and support the Attorney General's Office's investigation and law enforcement activities in accordance with the applicable regulations." Four sources familiar with the matter said that at least four trading firms have received a request to help with the investigation by Singapore's Corrupt Practices Investigation Bureau. They asked not to be named due to the sensitive nature. CPIB didn't immediately respond to an inquiry for comment. Bloomberg reported earlier that Singapore trading companies had been approached as part of the investigation. The Indonesian Attorney General's Office has said that it has interviewed hundreds of witnesses as part of the investigation.
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Six people killed by heavy rains in China's South, disaster alerts issued
State media reported that heavy rains over the weekend in China's southern Guangdong province and Guangxi affected trains and power supplies, and killed at least six. There were also alerts for geological disasters and severe flooding in certain parts of China. The National Meteorological Centre of China issued several heavy rain warnings from Sunday through Monday in the Jiangxi region, Zhejiang province, Fujian, Guangxi, Guangdong and Guangxi regions, and the northwestern province Xinjiang. The yellow alert, which indicates a high-risk of mountain flooding, was issued for parts of Zhejiang and Fujian. According to Shenzhen Railway authorities, heavy rains on Monday caused the closure of at least 10 railway lines that connect Shenzhen to other cities. State media reported that more than 620,000 homes in Guangxi had lost electricity in the past few days because of rain. As of Monday, the local power provider had restored electricity to about 600,000. China uses a four-tiered weather warning system, with the red color representing the most serious warning. This is followed by yellow, orange and blue. The Chinese meteorological data shows that 2024 is the hottest year since records started over 60 years ago. This is the second consecutive year where milestones have been broken. The warmer weather last year was accompanied with stronger storms, higher rainfalls and spikes in China's power consumption. CCTV, the state broadcaster, said that heavy rains were also expected in the Tianshan mountains and the far west region of Xinjiang from Monday through Tuesday. Reporting by Farah master and the Beijing Newsroom; editing by Sonali and Mark Heinrich
Blackstone's $11.5 billion TXNM Energy investment is a bet on the soaring demand for power
Blackstone Infrastructure is acquiring utility company TXNM Energy for $11.5 billion, including debt. The investment firm is betting on the rising demand for electricity in the U.S. and a move to cleaner energy sources.
TXNM shares rose 9.2% in premarket trade to $57.75 after Blackstone Infrastructure, a New Mexico-based utility, announced on Monday that it valued the company at $61.25 a share. This represents a 15% premium compared to the last close of the stock, according to LSEG.
More companies are investing in utilities as the U.S. is expected to have a record-breaking power demand in 2025. This will be driven by increasing energy consumption in AI and cryptocurrency datacenters, as well as residential and commercial consumers.
Utility NRG Energy announced last week that it will acquire certain power generation assets in a $12 billion deal from energy infrastructure investment company LS Power.
Earlier this month, KKR Investments and PSP Investments bought a 20% share in American Electric Power’s transmission network. The deal was worth $2.82 billion.
Last week, it was reported that Blackstone is in negotiations to purchase the utility focused on New Mexico and Texas. This information came from people who are familiar with the situation.
Blackstone, a $60 billion infrastructure asset manager, bets that the high capital requirements in grid modernization and stable, regulated returns make TXNM an ideal long-term investment.
TXNM said that the long-term capital provided by Blackstone will help it meet its clean energy and electricity demands, while maintaining grid stability.
The company also plans to issue another $400 million in equity before the Blackstone deal is completed.
According to its website, TXNM Energy supplies electricity to 800,000.
TXNM reported that CEO Pat Collawn would step down after the closing of the deal, which is expected to take place in the second half 2026. He will be replaced by Don Tarry, an insider. Tanay Dhumal reported from Bengaluru. Editing was done by Anil D’Silva and Shinjini Ganguli.
(source: Reuters)